The World Trade Organization on Tuesday quoted that they expects global trade would drop around 18.5% during the second quarter of 2020 taking in account the various restrictions implied by countries. The volume of merchandise trading shrank 3% year-on-year in the first quarter of 2020. The global watchdog further said that trade fell sharply in the first half of the year as the pandemic upended the global economy due to social distancing norms regulated harshly.
However, with rapid response from the world governments, the WTO economists now believe that while the world trading scene will experience a sharp decrease in volumes of trading, they are unlikely to reach the worst-case scenario that was predicated in April. “The fall in trade we are now seeing is historically large – in fact, it would be the steepest on record. But there is an important silver lining here: it could have been much worse,” said WTO’s outgoing Director-General Roberto Azevêdo, in a press release on Tuesday.
The Geneva-based organization said that the decline in world trade would exceed the volume of decline in sales recorded during the 2008-09 recession with merchandise trading declining 13-32% in 2020 alone due to the ongoing pandemic. owever, as major trading players loosened their social distancing norms, especially to the aviation industry, trading picked up. “These developments are reflected in a variety of economic indicators which, taken together, suggest trade may have possibly bottomed out in the second quarter of 2020,” it said, depicting a gloomy day for world trading as the pandemic rages on.
The WTO in April present two scenarios for the global trade. Pointing towards an optimistic scenario, the WTO said that the global merchandise trade could fall 13% in 2020 and rebound 21% in 2021. In a glass half-empty case, the WTO predicted that global trade would drop by 32% this year with a possibility of increase in trade by 24% in the next year.